Jobs Data, Virtues of Unit/Price Thinking

It’s always fun to use previous data to predict data. Humbling, oftentimes. Take this morning’s jobs report, for example.

As you know, I’m one of the most skeptical people in the world when it comes to employment data. It’s an area where (IMHO) a lot of “economists” and “advisors” really get things wrong. Mainly, it’s prone to sampling error rate.

A good portion of jobs created is driven by the CES Birth-Death Model (Current Employment Situation)

What most people don’t look at is the size of the annual “corrections” (and today a mid-year million job loss “corrected” in the July CES-B/D Model). The press doesn’t make a big deal about this, but if you scroll down over here, you can see the “over-estimated” number for last year was 2.9- million jobs. That’s a correction of 241,000 jobs per month. But the million job “correction” in July? More on this in a sec.

As you know, the only number I really pay attention to is the year-on-year change in total employment.

If your idea of a “good time” is getting plugged in to a Department of Labor dataset and running numbers at 5-freakin-Aye Em, then what you see is some remarkable consistency in job growth despite all the partisan job hype:

As you can see, Obama in 2014 carded best-round with a 2.837-million jobs gain while Trump, last year, carded a 2.88-million job gain. Once you back out the population growth, unvetted and illegal drive a lot of it, seems to me this is pretty close to a dead-heat.

Oh, and if evenly divided over 12-months, last year’s rate of increase would average about 240,000 per month of job growth.

On average, jobs created each both, above, or below the annualized rate, ought to guide us in our look-ahead view of the economy. Right?

Enough Data Background…

Here’s the press release opening:

“Total nonfarm payroll employment rose by 130,000 in August, and the unemployment rate was unchanged at 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Employment in federal government rose, largely reflecting the hiring of temporary workers for the 2020 Census. Notable job gains also occurred in healthcare and financial activities, while mining lost jobs. “

Now, our usual dime’s worth of analysis.

The total number of people working increased from 157,288,000 in July to 157,878.000 in August. Up 590,000.

Weekly hours worked were up 1-10th of an hour and pay was up 11-cents an hour.

Turning to the “estimated” CES Birth-Death Model? Trouble!

While it created 348,000 jobs in August – more than the reported increase, July’s employment estimate was revised down by more than a million jobs. See the yellow highlight:

I makes understanding the “job growth claims” a lot like three-card Monte, doesn’t it? I may not be the only one to notice, market futures faded a bit, though still up almost 100 on the Dow at press time.

Trump Channeling Cramer

““I think President Trump is set in his ways because he doesn’t see any weakening. I mean, look at the joblessness report today. What I’m surprised at is how strong the consumer is. I think the Chinese need it (a deal) more than we do. It’s statistical. I just think…….that our economy is very strong. If the Fed would lower rates to where the bond market says they should be, then I really wouldn’t worry about a recession.” @jimcramer @JoeSquawk”

There is so much cheap money out there, that Velocity of Money at M2 has resumed its death-march to zero:

And since it has turned down again, what Trump is trying to do is get the Fed to act in a historically unprecedented way calling for them to lower rates in advance of a recession showing up.

OK, fine. Jawboning. BUT here’s an important question: Doesn’t THAT turn American capitalism (free markets, yada, yada) into a Planned Economy and pull the rug out from under “market pricing” if the Fed can act proactively to screw people like (me) who play the short side?

Keep an eye on things around lunchtime when J. Powell, the Fed chief, speaks. If he hints that rates could come down more, then the market could get deeper into a ’29-like blow-off. On the other hand, if Powell says “that’s enough free money, for now” that might reignite the gold price which has been coming down quickly in the past 48.

Speaking of Great Inflations, the architect of Zimbabwe’s Bigger than the Weimar inflation has passed: Former Zimbabwean president Robert Mugabe has died at 95. We wonder if the Fed will send an emissary to the funeral? Making up Money was Mugabe’s road and we’re trying to follow, by the look of things.

Unit-Price Thinking

A ramble here, but the of our the core philosophies of UrbanSurvival is “If you want to get ahead, live below your means.” Worth mentioning to young people who have a hard time with the concept.

Watching the recent discussions arising from our Comments section (end of each report), seems this would be a fine time to mention that readers here seem to have one thing in common: A clear understanding of unit/price thinking.

If there’s one key to “living happily ever after” (and within your means) it’s understanding that when you spend money, you are buying a function.

Take cars: If you buy a car, you are buying safe, reliable transport from Point A to Point B. We drive a 14-year old Lexus and it still provides dandy service, so we don’t plan on buying a new car anytime soon. Since it has been paid for more than a decade, essentially our A to B cost is whatever oil, tires, water, and gas amount to. Car’s fully depreciated and being mint and one of the last Japan-made imports, it may actually go up in future years.

Other people like to “buy new” and impressive cars. I totally get that since there are a ton of professions where “success” is judged by the trappings including the car. Which has to be perfect and in alignment with the customer values.

Same in housing: You are buying functionality and basic comfort. Which is why we live in a double-wide, highly made-over trailer in the woods with a $10,000 a/c system. It’s the most functionality for the price.

When we bought this place in 2003, the first 13-acres with house on it was only $72,500. Land prices at the time were $2,500 per acre, Since we’ve tuned that and added on, that’s 2,450 square feet under air for what works out to $40,000 for a house (and outbuildings). Our basic “cost” is $16.32 per square foot of house.

Now, the other day, we caught an ad on WOAI (San Antonio) and the pitch was for a 2-acre lot in a “rustic setting.” $59,900 each.

Quickly, I set about figuring what this place will be worth (all 28.82 acres) should such astronomical land prices ever show up here. $1.7 million? And that’s land price only. Can that be right? Our hard land costs figure up to be about around $63,000 so the return at those prices is simply insane.

Of course, they will never get that high. But, the point is we are riding a wave.

Any idea how much the construction cost would be for a new home that’s 2,450 square feet? Construction prices around here are in the $125-$200 per square foot range. Using the lower number, a new home would be $$306,250 plus the land price of $60,000. Call that $367,000 and then tack on selling costs and now you’re looking at a lifestyle of the $385K to $395K area on a chunk of land that’s 1/14th the size of our yard.

Anyway, wanted to mention the ad. Shocking. Elaine and I think about moving back to a city, but the “cost of function” discussion keeps coming up. Oh, and we keep not moving, as a result.

Live below your means, separate the “cost of function” from the specious “cost of status” and you’d be surprised how much stress you can avoid. And how you can still build net worth, even on a budget.

All my posts for the last few days may have gone to the Woo-Woo territory, because I cannot find any evidence. Perhaps it’s time for me to depart from the internet? Godspeed to all of you!

1

n___ on September 7, 2019 at 11:07

You are surviving, and perhaps even thriving, in a place where ordinary people can’t make it. Your life experience is what this Urban Survival website is about. Keep posting. Talk about the neighborhood more. You don’t have to use people’s real names.

bruno on September 7, 2019 at 12:35

Thank you n__, I do, indeed, live in a wonderful city among the best and most courteous people on the globe. If it were not for the pains of growing too old I’d think that here is paradise. Others may vehemently disagree, of course. ;-)

Urban Survival website is my favorite. GU is the proverbial Renaissance Man, and most of people’s commentary are of high standards.

Eastcoast Deplorable on September 6, 2019 at 11:59

Mr Ure,

Could U please explain how “living below ones means is an advantageous position financially? Stress is certainly a negative health concern if left “un – treated”, but seems to this deplorable that Living waaay beyond ones means is a viable strategy for life under current conditions of MMT. Money is cheap, getting cheaper by the day,minute,second..CHEAPER! In fact we are already being conditioned for Negative Interest Rates. This MMT nonsense can not end well, it will B ugly when this “house of cards” falls flat down. So Im thinking its like one big hurricane party – till the Surge and Eye arrive – party like its 1999! just dont let elevator break U down…

I think I explained this, but a few minutes with an inflation calculator nails it all down. Remember in MMT inflation doesn’t go away – it gets pushed back. The dead Mugabe found this out. Great on the front end but at the end, escalating inflation expectations due to money watering-down leads to extreme price increases

So if one locks in a lower priced home, and pays it off with cheaper dollars, it’s a smarter move than living on the edge in a higher priced home, which while it tooo could be paid off, would take a lot longer – and that’s a trap for the people who live the high life rather than the responsible one… in my view…

A 10yo top shelf Merc, Ferrari, or Lambo makes more sense. Comparable performance and a much lower pricetag. Those three seem to hit the bottom of their sale curve at 10~11 years, THEN become an appreciating asset. Only problem with the supercars is maintenance. One daren’t drive them. I lusted after a 400i as a nice touring car for several years because they could be had for $12k-14k. Then I discovered a proper maintenance session on a Ferrari V-12 would cost nearly $28,000! ‘Bought a Rabbit Cabrio, instead…

silvermitt on September 6, 2019 at 11:06

Over inflated pricing of land and homes has skyrocketed beyond the average person’s ability to buy. I don’t care what the realtors are saying. Theories on paper vs reality’s paycheck, taxes, and ever encumbering utilities (gas, water, electricity) are wider apart than ever.

Little local anecdotal of land pricing and value for the money for you. I live on 4.125 acres of land with a 3,000 square foot home ( 800 of that is basement space semi-developed). Next to me is LAND A: 1.346 acre of land, locked between me and IN state highway (unusable), and semi next to me is LAND B: another 1.62 acre of land (also landlocked). Both of these properties are wooded, uneven grounding, and you cannot– by any stretch way or how– put septic services on them, so they are useless for new home habitation. I have contacted both of the owners to see about buying them as they’d be useful for me, connected to my property. The owner of land A said she’d get back to me soon to see about selling (been a year going on two now…) and the owner of land B gave me a going price of $5000. According to Spencer County Indiana, his land value is $4700, but yet land A is only worth $300. Worse yet, mine is valued at $6900 first acre, and the rest is worth $9000. Soooo… why all the different valuations?! No idea except the local government seems to think they’ll be able to keep the coffers from running dry by bleeding anyone who wants to live in this county. Neither of the two wooded properties have ANY value, even the woods are scraggly and do not have any trees valuable for lumber, but yet land B is worth $5k? The saddest part about this county I live in is that the little town I call mine has a very high rate of poverty, if what I’ve been told is true that half of the kids in school are on reduced lunches and paid fees (true, statistics say otherwise, but all you’d have to do is look around and you can see it glaring at you). And we’ve lost population as well (-12.9%). The only reason there is any valuations for this county is due to the power plant, AK Steel, a couple of smaller plants, and Holiday World, all which have seasonal workers, contractors, and some with true hired workers. If these guys skedaddled, Spencer county would be reduced to rubble quickly. But I’ll bet our taxes would still go up, and those properties value would be hijacked as well. To say I’m disgusted is putting it mildly.

I may get censored here, but this idiotic and way overplayed Sharpie incident on Dorian’s path made me think. A good friend of mine in Tuscaloosa said that the top three golf areas in the southeast are the Florida coast..(Trump has three courses there) Hilton Head area of South Carolina and The Trent Jones Trail in Alabama. Florida was washed out and trips and flight were cancelled over the Labor Day weekend and many cancelled their trips to South Carolina due to being in the path of the storm…That leaves Alabama…ruled out of the path by the Weather services.

First a back story. Years ago, when trump started to build golf courses, he calls on Bobby Jones jr, sone of Robert Trent Jones to design one of his courses. He said he could design it, but couldn’t put his name on it. Designers live on golf course design notoriety. When Jones asked why, Trump re-replied …Because my name will be on it. Jones declined the offer as did Tom Fazio later…another well known designer. Trump was furious.

So back to the story…One thing that Trump is good at is holding grudges and hoping others will fail when he does, to justify that his failure was a trend and not because of him. His golf courses in Florida are struggling…Many are choosing the Trent Jones trail lately over his clubs and my friend and a few golf enthusiasts and writers down in Alabama believe that Trump was trying to keep people from re-routing their golf outing for the holiday to Alabama.

So…what makes more sense? Trump brings out a chart on Sunday, that had a sharpie addition that he added that was based on three day old information…a lifetime in Weather time, and enough to get a weatherman fired if he did that on live TV…and then Trump claims he is right? OR…..Trump knows his Golf courses will be shut down over the weekend and doesn’t want the beneficiary to be a competing golf area of Alabama. Alabamans are talking about that theory. Makes sense.

Quoting a comedian as your source is comical (get the joke). This poster is zany (another joke).

A reliable source is one that provides a thorough, well-reasoned theory, argument, discussion, etc. based on strong evidence, not theater.

d on September 7, 2019 at 10:48

@ Mark

I submit a reply to you from a very ‘learned’ individual, that will rebuke everything you spew….

First Thing

Idiocy Watch: “The Weathering Heights”

With apologies to Emily Bronte, (Wuthering Heights, 1847) we are astounded to behold how the AUM (American Useless Media) is trying to turn a damn hurricane into a Trump-bash.

In the latest outbreak of lame-brain, we read from the Washington Post Syndicate in a Connecticut paper how “NOAA backs Trump on Alabama forecast, and rebukes Weather Service office that accurately contradicted him.”

This mess could be a poster-child for the power of media manipulation with a goal of historical revisionism.

Fortunately, since I happened to be writing about Dorian all last week, and referred at least once on the UrbanSurvival site that there was a chance that Dorian could “jump central Florida” and reconstitute in the Gulf of Mexico (where it would slam into either Florida, Alabama, or Mississippi), Trump is being taken completely out of temporal context.

Who are these people?

For the record: Friday morning (Aug 30) it looked like Dorian would, indeed, jump central Florida and head into the GOM.

Then, insert time slip on Friday. Topic of this morning’s Focus section.

Saturday morning, with the time slip done, the track of history changed,

Trump is now being made to “look the fool” by either the scavenging low-life of the press, or people over them who didn’t notice the time-slip and forgot the events 48-hours earlier.

Maybe they can’t keep up with Trump.

Notwithstanding, it’s the most obvious pant load of bash in the press right now. Downright embarrassing.

Then again, the socialist coup leadership is desperate to put points on the board, especially since the market keeps rising…

To me, it looks like the anti-Trump pile-on press (like CBS in their piece “Trump’s feud with weather officials over Alabama tweet ramps up’) is wasting the nation’s attention.

“makes sense’…only to TRUMP HATERS….like yourself….BUT nice try to ‘wiggle ‘ one in there

NM Mike on September 6, 2019 at 12:43

I’ve never understood the desire to golf. If I had such a desire, I’d build a course here. Other than having a relatively private place to talk business, it seems to be a self-chosen way to waste time and get a sunburn.

Rather than lugging around your stick and balls all over God’s green acres, then whacking off every once in a while, I imagine far more enjoyable activities for the same money or less.

Joe M. on September 6, 2019 at 15:24

“Rather than lugging around your stick and balls all over God’s green acres, then whacking off every once in a while, I imagine far more enjoyable activities for the same money or less.”

It’s actually quite enjoyable with the right partner along…

Censors!

Vote Trump on September 6, 2019 at 15:48

NM Mike: Golf is probably the best sport ever invented. To be out in nature competing against friends is one of the most enjoyable hours spent. In NY, I belonged to a country club & it was tremendous for business. Nothing bonds the boys together better than a golf game & a little socializing afterwards. “Four”. It I was Mark, I would tell you how expensive my golf clubs were.

looking out of the box on September 7, 2019 at 08:36

“Golf is probably the best sport ever invented.” “I’ve never understood the desire to golf.”

you know Mike and VT years ago I to never understood the purpose of golf.. smack a ball around the field….Then one year a young doctor was giving me an exam..At that time I was deep into my egg timer work life.. I literally worked day and night seven days a week.. a day of vacation was an eight or ten hour day.. anyway.. the young doctor after my physical.. said.. you are going to think I am nuts.. but this is the prescription you need… in neatly written letters was… one to two rounds of golf per week.. I asked him puzzled.. why golf… his response was.. your work life is like burning the candle at both ends.. eventually the body will start to rebel.. you need to take time to let the body rebuild itself.. Golf even though it sounds silly and heck smack some ball around the cow pasture stupid.. the whole thing is you have to relax before you can play it.. if your not relaxed the ball is going to go everywhere but where you want it to.. So for years I would go out.. and he was totally right.. until my tension was gone the ball went every which way but to the hole.. He is now almost retired no longer that young man working the halls with me.. instead he is the chief medical adviser to one of the biggest hospitals.. nice kid he got into medicine for the right reasons.. he had a sincere love for medicine and mankind..

Joe M. on September 6, 2019 at 15:20

I understand your point, logic, and how the reason is tied to precedental behaviors. I don’t think it’s far fetched at all. However, I doubt he drew the bubble and I would like to know where those AL golf courses are located… I believe the bubble got drawn because the logical path of the cone on the chart went across Florida and into Alabama. This was a case of bad staff work, poor briefing, and somebody pretending to be a weather expert.

A talented astrologer I follow says that there will be a global currency reset in the next year or two that may include blockchain cryptos along with PM’s. The level of debt in the first world countries is irredeemable so the whole mess has to come down with a hard reboot.

UpDownSideways on September 6, 2019 at 09:05

This market correction, if it is one, has me baffled. I thought this would be a down week. The NASDAQ has broken the 50 day moving average & is at the top of upper Bollinger Band, so it is a crapshoot on which way it is going. So it is telling me, whatever your game plan was yesterday, stay with it, you have a 50/50 chance of being right.

Joe M. on September 6, 2019 at 15:29

It’s not you. Everything is broken and the normal rules don’t work anymore. 100 experts with 100 opinions to justify 100 reputations. The only folks who know anything are the quants writing the programs driving the train. That code is probably the most highly guarded information on the planet.

Bryce's Lazy Porch Garden on September 6, 2019 at 18:02

Lookout Au brain and watch what’s happening you’ll see it it’s right there it’s like looking at the spokes olive oil and out of all the spokes on the Wheel you have to pick one of those folks and on each spoke this different levels from the center all the way out to Seattle case once you pick one of those Faye become your reality and what happens next is this how many other people are picking the same spoke at the same variation from the center this is how the universe works,,,, excuse a moi, this is a rough unedited draft. I’m going to use the word permit you ate it again Allison other post because your thoughts have wings they travel if you’re in the middle of the city or in the middle of a war and you have thoughts among of the among all the others that are their your thoughts kit pretty much .

cancelled but if you’re in the outer limits I was city or a County your thoughts rule and if you gradually expand those thoughts to the Outer Perimeter of your residence they either are counteracted against or they expand so there is always a expanding thought vibration weather from the center that you are at or weather from the outer perimeter of the center and as you see in the spoked wheel as there are outer perimeters from the Cent Center.

If you live in a city your control by the masses if you live almost alone in a rule area you’re controlled bye each of the agreements that you have with your neighbors. So the masses in the city do not control the world the world is controlled bye the controllers in the rule areas of the world who master power over the cities and then occasionally there is a an institution by their power that try to chasan another rule area.

If you question who has the real power they are the ones who still have their memory of the past 100, thousands Millions, billions, trillions quadrillions years ago.

So now as we let the Looting begin. From the cities two though tender Switzerland rule areas.

As they think they’re winning suddenly it all changes a different spoke a different level of spoke interfere. As the spoke wheel remains dormant it’s very clear to see where everything’s at and where everything’s going.

Now some weird outer space Inner Space reason thus spoke is turning.

Have you ever been on one of those merry go round on the school grounds where someone on the outside pushes faster and faster but the person not the middle doesn’t go nowhere they don’t get slung off on the people kids on the Outer Perimeter gets slung off as it goes faster and faster.

The inner perimeter has and The Interpreter retains the secrets to who will remain. If the inner perimeter was true and then one of you out of the 12 became controlling.

Do not get settled down in your brain on one thing.

To advance with a glance at the ice that’s floating from the surface or remember when you were a kid and you threw that flat stone across the water and it’s sKim that’s the most important thing is do not get entangled on one thing but keep skimming along until you find out what is right and what is wrong . you will get there,

The sense of elevation will appear,

What appears is sensationalism.

The definition is the theory that all knowledge originates in sensation, or is composed of transform sense elements, that all Consciousness is modified sensation, and all mental phenomena has a sensory basis: a branch of modern empiricism. 2 the use of meodramtic methods in writing or speaking. 3. The theory that feeling is the only Criterion of good.

We express those by singing two other the words or sounds with musical inflections of The Voice.

This is great unto you.

It means you have a large mental or moral or other endowments or your excellent for instance you’re great at carpentry or your high-minded or you are powerful Noble and influential or Rich.

I know I’m getting ready to stenotype .

And you have to find your own Ivory Tower.

May all beings be lovingly fulfilled may all beings be financially for Phil and may all beings be readily fulfilled .SO BE IT.

Joe M on September 6, 2019 at 08:54

1/4-acre lot in metro D.C. on the Maryland side is $100K. More in Virginia. Soil quality is immaterial. Add a house for $100-$160 per sf.

oqwazyme on September 6, 2019 at 08:41

George

Land will continue to rise in price, as people become more concerned with food production and distance from the chaos of large population centers. Besides the city is for the mind and the country is for the soul. People are going to be doing a lot of soul searching.

Tumbleweed on September 6, 2019 at 15:09

“the city is for the mind and the country is for the soul” Love that line! Is it an original?